Japan - Mizuho Denies Systems Merger Delay; Work On Problem Continues

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TOKYO -(Dow Jones)- Mizuho Holdings Inc. (J.MZO or 8305), whose banking unit has been plagued by a series of computer system malfunctions, Thursday denied a report it is considering postponing the complete integration of its backbone computer systems scheduled for next spring.

"We are currently working to resolve the problem, and there is no truth to the report," said a Mizuho spokesman.

The Nihon Keizai Shimbun reported in its Thursday morning edition that Mizuho is considering delaying the complete system merger by more than one year. It will also entirely upgrade the software used to run the backbone system, the report said.

The group's Mizuho Bank has experienced computer system glitches affecting its automatic teller machine network and settlement transactions since its April 1 formation through the reorganization of Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan into a commercial banking unit and a corporate banking institution.

As of Wednesday, Mizuho Bank still had 130,000 incomplete automatic utility payment settlements. At one point, the bank suffered as many as 2.5 million delayed payment settlements and 60,000 cases of duplicated withdrawals.

Analysts said a delay in the complete integration of backbone computer systems could hinder the banking group's development of new products and service. But more importantly the reputation of the world's largest banking group could fall further among individual and corporate customers.

Wednesday, Japan 's Rating and Investment Information Inc. said credit ratings on banks under Mizuho Holding may drop in the medium- to long-term as a result of the system problems.

As it is difficult to gauge the immediate extent of the damage, the ratings agency isn't likely to take any ratings actions soon on the Mizuho banks. But the computer glitches have undermined customers' belief that banking operations can be settled smoothly, and may undermine the operational base of the banks in the medium- to long term, R&I said.

Yahoo!

-- Anonymous, April 18, 2002

Answers

TOKYO, Japan -- Mizuho Holdings Inc., the world's largest bank by total money managed, says it will take one month to clean up the mess from integrating its three member banks.

Mizuho told CNN on Thursday that its operations will be completely back to normal by May 1. A programming error led to a mammoth glitch in its computer systems on April 1.

"The most important thing is to recover the current situation, and then we'll think about how to prevent this situation's recurrence," Mizuho spokesman Yukio Yokoyama said. "Then we'll find what the cost of the program is, and then we have to think about responsibility for that action."

The systems-integration disaster is likely to claim the heads of Mizuho's former joint CEOs, who already stepped down as previously planned from their positions on April 1.

Mizuho's three member banks chose March 31, the end of Japan's business year, as the date to merge into two companies: Mizuho Bank and Mizuho Corporate Bank.

But a computer-programming error fouled the sorting of the mammoth amount of data attempting to flow between the three banks: Fuji Bank, Dai-Ichi Kangyo Bank and Industrial Bank of Japan.

About 7,000 ATMs stopped working, millions of automatic transactions stalled and customers paid twice for some utility bills. NTT, Japan's largest phone company, reportedly plans to charge the bank 100 million yen for extra work.

Management is briefing the board, which is widely expected to require the former CEOs to resign completely from the bank, where they now serve as special advisers, as well as return part of their pension pay.

But Mizuho states it is first focusing on getting service back to normal. It is close to clearing the backlog of automated debits, millions of which jammed. Day-to-day banking is already back to normal for new customer transactions.

Heavy criticism of management

There has been heavy criticism of top management, which decided to go ahead with integration despite knowing of problems. The bank's new president, Terunobu Maeda, allegedly had a report on the issue.

Critics contend Mizuho was embarrassed to miss its own deadline for integration, and so pushed ahead despite almost certain disruption for customers.

Mizuho admits it had not fully tested the system before the integration. But the bank responds that the error stemmed not from integration but from data processing.

The bank's spokesman says it did not know of the computer-code mistake, which then snowballed before the bank could fix it, due to the vast amount of data involved.

"At the end of March, we had already processed 80 percent of the data for April 1st. So top management decided, 'Let's go,' " Yokoyama said. "It wasn't because it is embarrassing or anything like that."

"There was a small programming mistake in leading and sorting the information to the three systems, and then the data was a little bit messed up because of the big volume of data," he said. "It came up once, first, on April 1. So two factors caused the problem."

Yamamoto takes responsibility

The bank has reverted to magnetic tape and archive information to correct the transactions that went haywire. Mizuho says it would have been more disruptive to the Japanese banking system in general for it to retract its integration.

Yoshiro Yamamoto, former president of Fuji Bank, says he and his co-CEOs at the time of integration accept responsibility.

Yamamoto joined Katsuyuji Sugita, of Dai-Ichi Kangyo Bank, and Masao Mishimura, of Industrial Bank of Japan, in stepping down as CEO on April 1.

Mizuho stock ended the morning down 0.71 percent at 281,000 yen. That's in contrast to the broad Topix index, which is up 0.66 percent at 1,096.81. The tech-driven Nikkei is up 0.46 percent.

CNN

-- Anonymous, April 18, 2002


Data on remittance disappears from Mizuho computers 04/28/2002

Data on some cash transfers made on April 1 have disappeared from the trouble-plagued Mizuho Financial Group computer, it was learned over the weekend.

Mizuho Bank, a member of the Mizuho group, still cannot confirm that thousands of cash transfers have been done, according to bank sources.

The revelations contradict the announcement made by the Mizuho group on April 18 that all the 2.5 million transfers delayed because of a glitch in its computer system had been completed.

Mizuho is contacting companies and organizations that requested the bank to transfer fees directly from their customers' accounts in a bid to confirm the transfers were actually made. For transfers found not to be completed, the bank will make a payment to the companies on behalf of their customers as a provisional measure.

Organizations that requested the bank to transfer fees directly from customers and members include companies, local governments and condominiums' residents associations, bank officials said. (Mainichi Shimbun, April 28, 2002) http://mdn.mainichi.co.jp/news/20020428p2a00m0fp008000c.html

-- Anonymous, May 06, 2002


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